Reforms enacted in 2011 to keep the nation’s highest property taxes in check are showing signs of weakening as a growing number of New Jersey towns fail to stay within the 2 percent cap on increases that formed the cornerstone of the effort.

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The total amount of tax levied to pay for town and county services, as well as public schools, rose by at least 3 percent in a third of the municipalities across North Jersey and statewide in 2015.

Recently released tax data show that, four years after Governor Christie and the Legislature reached the landmark bipartisan deal imposing the cap, 60 percent of the state’s municipalities exceeded it in 2015, an analysis by The Record has found. The actual number — 334 of the state’s 565 municipalities — is higher than it has been at any point since the reforms were passed, as communities use exemptions in the law to surpass the limit, the analysis found.

While most tax increases across the state are nowhere near those seen in the years before the accord, last year’s count of towns surpassing the cap was up from 225 in 2012 and marked the third year in a row that the number grew, a sign of the mounting struggles localities face in containing rising costs.

Municipalities managing to stay within the limit last year included only 21 of the 70 in Bergen and four of the 16 in Passaic. Those numbers also are at or tied for their lowest points since the ceiling was imposed, according to the analysis.

To be sure, from a long-term perspective, there is little indication that towns are reverting in large numbers to the time before the cap was set, when tax levies commonly rose 5 percent or more. But the total amount of tax levied to pay for town and county services, as well as public schools, rose by at least 3 percent in a third of the municipalities across North Jersey and statewide in 2015.

Topping last year’s tax increase list in Bergen and Passaic, with hikes of more than 5 percent, were Edgewater, Englewood Cliffs, Rochelle Park, Haledon, Prospect Park, Totowa and Woodland Park. The broader trend boosted the average residential property tax above $10,000 in 49 municipalities in Bergen and Passaic counties, up from 33 in 2010.

Aside from Teterboro, which has few residential properties, the average 2015 residential bill in the two counties ranged from $6,235 and $6,844 in the industry-heavy boroughs of East Rutherford and Carlstadt, respectively, to $19,254 and $20,888 in upscale Tenafly and Alpine, respectively.

The trend comes at a time of ever-growing pressures on municipal and school budgets, including rising salaries, health-insurance and pension costs, limited state aid, and public pressure to hold the line on costs.

Rising pressure

As local fiscal planners across the state prepare their spending plans for 2016, those forces remain significant obstacles to reining in the inexorable rise of tax bills.

“What you’re seeing is the growing effect of ever-increasing pressures on local budgets, but the cap is still keeping increases somewhat in check, and nowhere near the increases we were seeing before and during the recession,” said Marc Pfeiffer, assistant director of the Bloustein Local Government Research Center at Rutgers University. “The upward pressure, however, is increasing.”

State Senate President Stephen Sweeney, who sponsored the reform measure, also took a long-term view, praising the tax cap for slowing the pace of increases.

“The law marked significant progress in the decades-long problem of property taxes in New Jersey by imposing more discipline on spending at the local level,” said Richard McGrath, Sweeney’s spokesman, adding that local governments needed to find more ways to share services as a means to save money.

The state Department of Community Affairs, which oversees local government spending, acknowledged that a growing number of towns are using exemptions written into the 2011 law for increases beyond the cap for certain expenses. But department officials also pointed to a different measure, noting that a rising number of towns had seen tax rates — or the amount that property owners pay per $100 of assessment — increase by less than 2 percent.

The Record’s analysis, however, focused on the measure that’s the subject of the 2011 caps — tax levies, or the total property taxes needed to support spending on local government, schools, and the county.

In the complex world of property taxes, tax rates can sometimes remain virtually the same, or drop, even when a tax levy increases significantly. That can happen, for instance, when property assessments — the values used to determine individual property owners’ taxes — are updated and raised to current market levels in a process called a revaluation or reassessment.

That’s what happened in Prospect Park, where the total tax levy rose 5.2 percent in 2015. Its tax rate dropped because of a revaluation that took effect last year. Similar things also happened in South Hackensack and Woodcliff Lake, where the levy went up more than 2 percent, but the rate decreased.

Community Affairs spokeswoman Emike Omogbai insisted that the cap “has been effective” in producing a “stark contrast” in tax increases from earlier years.

While the state seeks to spotlight progress, school and municipal trade groups take a dim view of the trend, predicting that even fewer places will meet the cap in the next few years because of costs that are both subject to and exempt from the cap.

Among the exemptions are increases from rising employee health insurance premiums, borrowing for major construction projects, increased school enrollments and emergencies such as hurricanes or major snowstorms. A town also can exceed the cap in a given year if it stayed under the cap in the prior three years, according to the Community Affairs Department.

Representatives of local governments say the need to use the exemptions to boost taxes will continue as costs subject to the cap — mainly salaries and maintenance of public buildings — keep rising, giving officials less and less wiggle room to keep levy increases to 2 percent.

“I would say it’s likely to continue. Absent favorable events elsewhere, more towns will be forced to use the exceptions and go over the 2 percent cap,” said Jon Moran, senior legislative analyst of the New Jersey League of Municipalities. “I wouldn’t guess at a percent, but I think it will increase.”

Adding further to the fiscal pressure are changes in the way annual health-insurance premium increases — which often top 5 percent — are shared between local governments and their employees. After a period in which higher employee contributions were phased in, upcoming increases are likely to be borne more by towns, counties and school systems.

“The chips are going to run out” on school districts containing tax increases without cutting programs, said John Donahue, executive director of the New Jersey Association of School Business Officials.

Wide variety

In its analysis, The Record found that changes in the amounts raised to operate local governments and schools in Bergen and Passaic counties last year varied widely.

In the 12 area municipalities with total levies of more than $100 million in 2015, the changes ranged from a 1.5 percent cut in Paterson to a 3.9 percent increase in Hackensack. Throughout Bergen County, 19 towns saw their levy increase by less than 2 percent while it declined in two places, tiny Rockleigh and Teterboro.

In Teterboro, the levy dropped 1.6 percent, to $5.2 million, after it changed the way it gets police services, according to Borough Manager Nicholas Saros. Teterboro, which has no police of its own, went from getting law enforcement from Bergen County as well as neighboring Moonachie to using only Moonachie police, a savings of about $200,000, he said. The borough also has gradually pared down its finance officer and assessor positions from full time to part time, he said.

At the other end of the scale were three communities where the levy jumped more than 5 percent: Englewood Cliffs, Rochelle Park and Edgewater.

The levy in booming Edgewater, which has seen large increases in its school enrollment, has been rising by 5 percent to 7 percent every year since the cap was imposed.

Englewood Cliffs and Rochelle Park said their levy increases last year were the result of unique circumstances.

Joseph Parisi Jr., who stepped down as mayor of Englewood Cliffs last year, said the hike in the tax levy, up to $31.3 million, resulted from successful tax appeals, as well as the loss of fine revenue from red-light cameras when, in December 2014, the state Department of Transportation discontinued a five-year pilot program enforced in 24 towns, including Englewood Cliffs.

“It was really a revenue shortage,” Parisi said.

For Rochelle Park, expenses subject to the cap rose, partly because local funding for the county library system doubled, said Chief Financial Officer Roy Riggitano. At the same time, increases in pension, health insurance and loan repayments for road repair and improvements to a park all increased more than 2 percent

“You have increases in both cap and out-of-cap expenses,” he said. “I have to take from Peter and give to Paul to stay within the confines of the law.”

More typical in Bergen were places like Mahwah, Rutherford, Fair Lawn and Washington Township, where the rise was comparable to a 2.5 percent countywide increase.

In Passaic County, a key factor driving a majority of towns past the cap was something out of their control: the way county taxes are collected. Not only did Passaic County government taxes rise 4.8 percent, the levy was reallocated in a way that raised the bill for most municipalities, while Paterson’s share dropped. That happened because of differences between towns in how much property values have recovered from the slump of the late 2000s.

Particularly hard-hit was Totowa, where a 20 percent rise in its county share helped kick its overall levy up 8.1 percent, to $52.7 million, after two years when that figure increased or decreased less than 1 percent.

“We really got walloped by the county,” said Mayor John Coiro.

Paterson, meanwhile, saw its county share drop 5 percent and its total levy dip 1.5 percent, to $233.6 million, continuing a mixed pattern of ups and downs in recent years.

In the middle of other Passaic County towns, with increases of around 2.5 percent, were Little Falls, West Milford, Wayne and Pompton Lakes.

Worried about cuts

Looking ahead, the school and municipal lobbying groups say they remain worried that cap requirements soon will start to cut significantly into municipal services or school programs, especially as health and public pension costs rise.

“I think education will suffer with the current system in place, absent the state coming up with more money” for local school districts, said Donahue of the school business officials association.

But Pfeiffer, the Rutgers analyst, said the pace of increases should slow, given the limited exemptions allowed.

“You’ll probably hit a new plateau,” he said. But as long as the levy cap remains in place, “I don’t think there’s much chance that we are going back to the 7-, 8-, 9-percent increase days.”

The total amount of tax levied to pay for town and county services, as well as public schools, rose by at least 3 percent in a third of the municipalities across North Jersey and statewide in 2015.

By DAVE SHEINGOLD and JOHN C. ENSSLIN

staff writers |

The Record

Reforms enacted in 2011 to keep the nation’s highest property taxes in check are showing signs of weakening as a growing number of New Jersey towns fail to stay within the 2 percent cap on increases that formed the cornerstone of the effort.

Recently released tax data show that, four years after Governor Christie and the Legislature reached the landmark bipartisan deal imposing the cap, 60 percent of the state’s municipalities exceeded it in 2015, an analysis by The Record has found. The actual number — 334 of the state’s 565 municipalities — is higher than it has been at any point since the reforms were passed, as communities use exemptions in the law to surpass the limit, the analysis found.

While most tax increases across the state are nowhere near those seen in the years before the accord, last year’s count of towns surpassing the cap was up from 225 in 2012 and marked the third year in a row that the number grew, a sign of the mounting struggles localities face in containing rising costs.

Municipalities managing to stay within the limit last year included only 21 of the 70 in Bergen and four of the 16 in Passaic. Those numbers also are at or tied for their lowest points since the ceiling was imposed, according to the analysis.

To be sure, from a long-term perspective, there is little indication that towns are reverting in large numbers to the time before the cap was set, when tax levies commonly rose 5 percent or more. But the total amount of tax levied to pay for town and county services, as well as public schools, rose by at least 3 percent in a third of the municipalities across North Jersey and statewide in 2015.

Topping last year’s tax increase list in Bergen and Passaic, with hikes of more than 5 percent, were Edgewater, Englewood Cliffs, Rochelle Park, Haledon, Prospect Park, Totowa and Woodland Park. The broader trend boosted the average residential property tax above $10,000 in 49 municipalities in Bergen and Passaic counties, up from 33 in 2010.

Aside from Teterboro, which has few residential properties, the average 2015 residential bill in the two counties ranged from $6,235 and $6,844 in the industry-heavy boroughs of East Rutherford and Carlstadt, respectively, to $19,254 and $20,888 in upscale Tenafly and Alpine, respectively.

The trend comes at a time of ever-growing pressures on municipal and school budgets, including rising salaries, health-insurance and pension costs, limited state aid, and public pressure to hold the line on costs.

Rising pressure

As local fiscal planners across the state prepare their spending plans for 2016, those forces remain significant obstacles to reining in the inexorable rise of tax bills.

“What you’re seeing is the growing effect of ever-increasing pressures on local budgets, but the cap is still keeping increases somewhat in check, and nowhere near the increases we were seeing before and during the recession,” said Marc Pfeiffer, assistant director of the Bloustein Local Government Research Center at Rutgers University. “The upward pressure, however, is increasing.”

State Senate President Stephen Sweeney, who sponsored the reform measure, also took a long-term view, praising the tax cap for slowing the pace of increases.

“The law marked significant progress in the decades-long problem of property taxes in New Jersey by imposing more discipline on spending at the local level,” said Richard McGrath, Sweeney’s spokesman, adding that local governments needed to find more ways to share services as a means to save money.

The state Department of Community Affairs, which oversees local government spending, acknowledged that a growing number of towns are using exemptions written into the 2011 law for increases beyond the cap for certain expenses. But department officials also pointed to a different measure, noting that a rising number of towns had seen tax rates — or the amount that property owners pay per $100 of assessment — increase by less than 2 percent.

The Record’s analysis, however, focused on the measure that’s the subject of the 2011 caps — tax levies, or the total property taxes needed to support spending on local government, schools, and the county.

In the complex world of property taxes, tax rates can sometimes remain virtually the same, or drop, even when a tax levy increases significantly. That can happen, for instance, when property assessments — the values used to determine individual property owners’ taxes — are updated and raised to current market levels in a process called a revaluation or reassessment.

That’s what happened in Prospect Park, where the total tax levy rose 5.2 percent in 2015. Its tax rate dropped because of a revaluation that took effect last year. Similar things also happened in South Hackensack and Woodcliff Lake, where the levy went up more than 2 percent, but the rate decreased.

Community Affairs spokeswoman Emike Omogbai insisted that the cap “has been effective” in producing a “stark contrast” in tax increases from earlier years.

While the state seeks to spotlight progress, school and municipal trade groups take a dim view of the trend, predicting that even fewer places will meet the cap in the next few years because of costs that are both subject to and exempt from the cap.

Among the exemptions are increases from rising employee health insurance premiums, borrowing for major construction projects, increased school enrollments and emergencies such as hurricanes or major snowstorms. A town also can exceed the cap in a given year if it stayed under the cap in the prior three years, according to the Community Affairs Department.

Representatives of local governments say the need to use the exemptions to boost taxes will continue as costs subject to the cap — mainly salaries and maintenance of public buildings — keep rising, giving officials less and less wiggle room to keep levy increases to 2 percent.

“I would say it’s likely to continue. Absent favorable events elsewhere, more towns will be forced to use the exceptions and go over the 2 percent cap,” said Jon Moran, senior legislative analyst of the New Jersey League of Municipalities. “I wouldn’t guess at a percent, but I think it will increase.”

Adding further to the fiscal pressure are changes in the way annual health-insurance premium increases — which often top 5 percent — are shared between local governments and their employees. After a period in which higher employee contributions were phased in, upcoming increases are likely to be borne more by towns, counties and school systems.

“The chips are going to run out” on school districts containing tax increases without cutting programs, said John Donahue, executive director of the New Jersey Association of School Business Officials.

Wide variety

In its analysis, The Record found that changes in the amounts raised to operate local governments and schools in Bergen and Passaic counties last year varied widely.

In the 12 area municipalities with total levies of more than $100 million in 2015, the changes ranged from a 1.5 percent cut in Paterson to a 3.9 percent increase in Hackensack. Throughout Bergen County, 19 towns saw their levy increase by less than 2 percent while it declined in two places, tiny Rockleigh and Teterboro.

In Teterboro, the levy dropped 1.6 percent, to $5.2 million, after it changed the way it gets police services, according to Borough Manager Nicholas Saros. Teterboro, which has no police of its own, went from getting law enforcement from Bergen County as well as neighboring Moonachie to using only Moonachie police, a savings of about $200,000, he said. The borough also has gradually pared down its finance officer and assessor positions from full time to part time, he said.

At the other end of the scale were three communities where the levy jumped more than 5 percent: Englewood Cliffs, Rochelle Park and Edgewater.

The levy in booming Edgewater, which has seen large increases in its school enrollment, has been rising by 5 percent to 7 percent every year since the cap was imposed.

Englewood Cliffs and Rochelle Park said their levy increases last year were the result of unique circumstances.

Joseph Parisi Jr., who stepped down as mayor of Englewood Cliffs last year, said the hike in the tax levy, up to $31.3 million, resulted from successful tax appeals, as well as the loss of fine revenue from red-light cameras when, in December 2014, the state Department of Transportation discontinued a five-year pilot program enforced in 24 towns, including Englewood Cliffs.

“It was really a revenue shortage,” Parisi said.

For Rochelle Park, expenses subject to the cap rose, partly because local funding for the county library system doubled, said Chief Financial Officer Roy Riggitano. At the same time, increases in pension, health insurance and loan repayments for road repair and improvements to a park all increased more than 2 percent

“You have increases in both cap and out-of-cap expenses,” he said. “I have to take from Peter and give to Paul to stay within the confines of the law.”

More typical in Bergen were places like Mahwah, Rutherford, Fair Lawn and Washington Township, where the rise was comparable to a 2.5 percent countywide increase.

In Passaic County, a key factor driving a majority of towns past the cap was something out of their control: the way county taxes are collected. Not only did Passaic County government taxes rise 4.8 percent, the levy was reallocated in a way that raised the bill for most municipalities, while Paterson’s share dropped. That happened because of differences between towns in how much property values have recovered from the slump of the late 2000s.

Particularly hard-hit was Totowa, where a 20 percent rise in its county share helped kick its overall levy up 8.1 percent, to $52.7 million, after two years when that figure increased or decreased less than 1 percent.

“We really got walloped by the county,” said Mayor John Coiro.

Paterson, meanwhile, saw its county share drop 5 percent and its total levy dip 1.5 percent, to $233.6 million, continuing a mixed pattern of ups and downs in recent years.

In the middle of other Passaic County towns, with increases of around 2.5 percent, were Little Falls, West Milford, Wayne and Pompton Lakes.

Worried about cuts

Looking ahead, the school and municipal lobbying groups say they remain worried that cap requirements soon will start to cut significantly into municipal services or school programs, especially as health and public pension costs rise.

“I think education will suffer with the current system in place, absent the state coming up with more money” for local school districts, said Donahue of the school business officials association.

But Pfeiffer, the Rutgers analyst, said the pace of increases should slow, given the limited exemptions allowed.

“You’ll probably hit a new plateau,” he said. But as long as the levy cap remains in place, “I don’t think there’s much chance that we are going back to the 7-, 8-, 9-percent increase days.”